When it comes to revenue recognition and billing, ERP systems do not have the depth of functionality needed to process revenue under the new ASC 606 and IFRS 15 guidelines. Many finance professionals must use manual methods outside the ERP system to address these challenges.
Spreadsheets are a common solution used by finance and accounting departments. They offer an affordable, low cost solution that is simple to use. Spreadsheets offer accounting departments a blank slate with endless possibilities and almost everybody knows how to use them. Let’s face it, a spreadsheet can do almost anything, and anything can be coded.
Are old school accounting methods holding back your business?
While spreadsheets can be a great and wondrous tool for many applications, they are far from an ideal choice as an accounting tool. Despite the above advantages, use of spreadsheets for this purpose can lead to considerable risk and inefficient processes. They create problems when it comes to reporting, audit, and application of the necessary security and controls to ensure accuracy of data.
It can be difficult to ensure accuracy when a company’s revenue data is in a spreadsheet. The probability of error is extremely high given the number of human ‘touches’ to the data. Without controls on who can touch what, it is very difficult to prevent human error or even malicious intent. Spreadsheets don’t offer audit trails to track changes which means companies must manually review the formulas and calculations to ensure the data is up to date. There is limited ability to understand the source of changes in the data.
We’ve all run into issues of version control, where we end up with multiple versions of the same Excel document. Only 1 person can edit the spreadsheets at a time. Further, spreadsheets have scalability limitations that many companies often reach. The more complex the revenue, the more cumbersome and time consuming the spreadsheets become. Accountants spend hours on the same process to close the month, the quarter and the year. According to a Ventanna Research 2014 benchmark survey “Eliminating the Risks of Spreasdheets in Finance”, spreadsheets, on average, require two to three days of maintenance per month to ensure the spreadsheets are reliable (source 1).
Is it time to move away from spreadsheets?
There comes a time when using additional software becomes a necessity. Companies must consider whether it’s time to leave Excel spreadsheets behind and implement a secure and scalable solution designed to handle the existing and new complexities of revenue management.
The benefits of revenue recognition automation software
ERP augmentation is an approach that enables you to keep your existing investment in your ERP backbone and surround it with deep functionality (typically cloud-based) modules to perform specific tasks. For revenue management, this software provides a clear and more accurate picture of your company’s financial health with a full audit trail where every single business change after the initial implementation is recorded. Companies can easily identify and monitor expected recognition of revenue. Finance and accounting departments rest easy knowing they have massively reduced the chance of human error impacting their revenue data. FP&A resources love the abundance of reporting available and the ability to create their own at will.
Instead of spending all of your time in Excel handling revenue activities, ERP augmentation software can perform revenue calculations quickly and in large volumes while ensuring accuracy. Now you can use those hours elsewhere like making vital strategic decisions or targeting areas for improvement.
Preparing for new revenue recognition guidance doesn’t have to be risky or burdensome. ERP augmentation is quick and easy to implement. To learn how Softrax ERP augmentation software works, visit www.softrax.com.
For additional information about dedicated billing and revenue management systems and how they can simplify your accounting procedures and improve your company’s bottom line, download Softrax white paper,
“Improving Billing and Revenue Management: A Guide for Getting Off Spreadsheets.”
If you want to read more on the options companies have when it comes to updating their existing ERP and financial systems subscribe Softrax blog today.
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Source 1: Ventanna Research. “Eliminating the Risks of Spreadsheets in Finance” Research Survey.Ventana Research April 2014.https://www.myaccountingteam.com/assets/mat-wp-eliminating_spreadsheet_risks.pdf